Last checked at 
Vodafone rises to the top of Britain's benchmark FTSE 100 equity index, boosted by a media report that it has suspended plans to approachKabel Deutschland Holding AG about a takeover bid.
The stock is up 1.7 percent at 164.60 pence by 1010 GMT, outperforming a 0.3percent gain on the FTSE 100 index and also featuring among the best performerson the pan-European FTSEurofirst 300 index.
An analyst says any decision not to pursue Kabel Deutschland could be goodfor Vodafone's stock price since it might imply that Vodafone feels there arebetter ways of using its cash to boost shareholder returns, such as by raisingits dividends.
Vodafone's shares have partly come under pressure on concerns it will beable to sustain its 6 percent dividend yield, compared with the FTSE 100 ov around 4 percent, and keep up with analyst expecptations that the firm willbe able to grow its dividend by about 1.5 percent in the coming year, thehighest among peers, according to Thomson Reuters Starmine Data.
"I suspect that Vodafone's shareholders have decided that when you run thenumbers, Kabel Deutschland doesn't really add the necessary value, and they'd belooking for better use of Vodafone's cash," says the analyst, who declines to benamed.
Simon Maughan, head of research at Olivetree Financial Group, writes thatthe likelihood that Vodafone will end up making an acquisition remains quitehigh, which could make its share price quite volatile in the near term.
"Implied volatility has jumped by over one third in a month and is now morethan two standard deviations above its average level relative to the sector.This implies a high probability of a large move in the share price," Maughanwrites in a research note.
"A purchase of Kabel Deutschland now looks a remote possibility, but anacquisition of some sort is far more likely, although there is room for thevaluation to express temporary relief," he adds.
Hartmann Capital trader Basil Petrides says he bought Vodafone shares foraround 162 pence on Tuesday and adds he would look to buy more of the stock ifit fell to around 161 pence.
"I would be a buyer on the dip. I see it in a 161-167 pence range, but Iwouldn't want to be caught in the middle of that range," he adds.
Reuters messaging rm://sudip.kargupta.thomsonreuters.com@reuters.net
